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Google's browser toolbar is back in court on patent infringement charges, after a U.S. court of appeals overturned part of a lower court decision. Google's AdSense contextual advertising service, though, is in the clear.

Hyperphrase Technologies filed suit against Google in April 2006, alleging that Google's AdSense and the AutoLink function of its toolbar infringed claims in four Hyperphrase patents relating to the contextual linking and presentation of information. The U.S. District Court for the Western District of Wisconsin rejected the allegations in a summary judgement in Google's favor, and Hyperphrase appealed.

On Wednesday, the U.S. Court of Appeals for the Federal Circuit upheld the parts of the summary judgement relating to AdSense, and some of the claims against AutoLink, but overturned the part of the ruling dealing with AutoLink's alleged infringement of two of the patents. It remanded the case to the district court to be reexamined.

AutoLink parses Web pages for text fragments in certain formats, and transforms them into links to Web pages it deems appropriate. For instance, it will link publication International Standard Book Numbers (ISBNs) to a corresponding listing on Amazon.com's bookstore, or link package tracking numbers to pages showing delivery status. It will similarly process U.S. street addresses and U.S. vehicle identification numbers.

In its ruling, the court of appeals found that the district court had considered an inappropriate interpretation for "data reference," one of the terms used in the patent claims to describe the way a link is made between a fragment of text and an element in a database. The court of appeals remanded the case to the district court to determine whether AutoLink infringed the patents under the new interpretation it suggested.

Some have likened AutoLink, introduced in early 2005, to an earlier initiative from Microsoft called Smart Tags, which sought to add links determined by Microsoft to certain keywords appearing on Web pages viewed through its Internet Explorer browser. The feature, included in beta versions of the browser bundled with Windows XP, was roundly rejected by users for the control it gave Microsoft over the appearance of Web pages, prompting the company to remove the feature from production versions in June 2001. However, it left the function in its Office XP productivity software suite, released in May 2001, where it became the subject of another patent lawsuit brought by Hyperphrase. Microsoft won a summary judgement in that case in 2003.

In Wednesday's ruling on the Google-Hyperphrase case, the court of appeals upheld the judgement of the district court regarding AdSense. The way AdSense infers the topic of a Web page to associate it with keywords that may not appear on the page, and link those keywords to advertisements, did not constitute use of a "data reference" in the sense of the Hyperphrase patents at issue, the district court had found, and the court of appeals agreed.

Google issued a statement saying it was "very pleased" that the court decided AdSense did not infringe any Hyperphrase patents. "We continue to believe the remaining claims in the lawsuit are without merit, and will vigorously defend against those claims," Michael Kwun, Google's managing counsel for litigation, said in the statement.

The company's latest quarterly financial report warns that is subject to intellectual property rights claims, and may face more in the future. Such cases are costly to defend and could require it to pay damages or prevent it from using certain technologies

One such case, brought by Northeastern University in Boston and by Jarg, a company in Massachusetts that develops distributed search technologies, charges Google with infringing a patent for a method of breaking database queries into fragments and distributing them to multiple computers to get search results faster. Google has until Jan. 11 to file a response in that case.

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